Alibaba Offers to Take Subsidiary Private

Alibaba.com, the only publicly traded subsidiary of the Internet giant Alibaba Group, may soon be private.

On Tuesday, Alibaba offered to buy the remaining shares of its subsidiary for 13.50 Hong Kong dollars ($1.74) a share, roughly the same price at which the unit went public in 2007.

“Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company,” Jack Ma, the chief executive of Alibaba, said in a statement. “With this offer, we provide our shareholders a chance to realize their investment now at an attractive cash premium rather than waiting indefinitely during this period of transition.”

The deal, which values the subsidiary at $8.7 billion, comes as Alibaba.com has been struggling to lift its stock price. Last year, the company started an internal inquiry and found that certain employees had helped defraud customers. The controversy quickly drove down the stock price, which dropped more than 45 percent. Shares of Alibaba.com were halted earlier this year.

The offer of 13.50 Hong Kong dollars a share is about 60 percent above the 60-day average closing price. Under Hong Kong regulations, Alibaba will not be allowed to increase its offer price for Alibaba.com.

The company plans to finance the deal from “a combination of new committed financing and existing cash on hand,” Alibaba said in the statement. It has lined up about $3 billion in financing from banks, according to a person with knowledge of the matter.

Alibaba has been in intense negotiations in recent months. Along with preparing a bid to take Alibaba.com private, the company was in discussions to buy back its shares from Yahoo, which owns a 40 percent stake in Alibaba. The parties seemed to be close to a deal, but talks fell apart early this month.